<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 2-15299
RAYCHEM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-1369731
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 Constitution Drive, Menlo Park, CA 94025-1164
(Address of principal executive offices) (Zip code)
(415) 361-3333
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
As of January 29, 1996, the registrant had outstanding 44,550,165 shares of
Common Stock, $1.00 par value.
<PAGE> 2
RAYCHEM CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1: Financial Information
Consolidated Condensed Statements of Operations -
Three and Six Months Ended December 31, 1995 and 1994 1
Consolidated Condensed Balance Sheets -
December 31, 1995, and June 30, 1995 2
Consolidated Condensed Statements of Cash
Flows - Six Months Ended December 31, 1995 and 1994 3
Notes to Consolidated Condensed Financial
Statements 4-8
Item 2: Management's Discussion and Analysis 9-15
of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1: Legal Proceedings 16
Item 4: Submission of Matters to a Vote of Security Holders 16-17
Item 5: Other Information 17
Item 6: Exhibits and Reports on Form 8-K 18
SIGNATURES 19
</TABLE>
<PAGE> 3
RAYCHEM CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 411,051 $ 382,494 $ 821,566 $ 750,639
Cost of goods sold 196,661 184,648 391,575 367,507
Research and development expense 30,511 28,748 60,555 55,977
Selling, general, and administrative
expense 134,122 121,267 256,582 236,460
Provision for restructuring and
divestitures -- -- -- 23,900
Loss (adjustment) on formation of
Ericsson Raynet joint venture and
other Raynet items -- (423) -- 31,300
Equity in net losses of affiliated
companies 18,234 12,943 28,860 37,316
Interest expense, net 2,716 2,973 6,016 7,567
Other (income) expense, net (6,504) 1,204 (2,773) 5,116
------------ ------------ ------------ ------------
Income (loss) before income taxes,
extraordinary item, and change in
accounting principle 35,311 31,134 80,751 (14,504)
Provision for income taxes 10,209 11,135 23,219 13,825
------------ ------------ ------------ ------------
Income (loss) before extraordinary item
and change in accounting principle 25,102 19,999 57,532 (28,329)
Extraordinary item - (loss) adjustment
related to early retirement of debt,
net of $0 income taxes -- 756 -- (6,318)
Cumulative effect of change in
accounting principle, net of
$0 income taxes -- -- -- (1,477)
------------ ------------ ------------ ------------
Net income (loss) $ 25,102 $ 20,755 $ 57,532 $ (36,124)
============ ============ ============ ============
Average number of common
shares and equivalents outstanding 45,856,806 44,225,536 45,381,290 43,394,465
============ ============ ============ ============
Earnings (loss) per common share:
Income (loss) before extraordinary
item and change in accounting
principle $ 0.55 $ 0.45 $ 1.27 $ (0.65)
Extraordinary item -- 0.02 -- (0.15)
Change in accounting principle -- -- -- (0.03)
------------ ------------ ------------ ------------
Net income (loss) $ 0.55 $ 0.47 $ 1.27 $ (0.83)
============ ============ ============ ============
Dividends per common share $ 0.08 $ 0.08 $ 0.16 $ 0.16
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE> 4
RAYCHEM CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited)
December 31, 1995 June 30, 1995
----------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 168,990 $ 118,067
Accounts receivable, net 301,445 304,819
Inventories:
Raw materials 80,067 76,862
Work in process 53,919 53,632
Finished goods 99,597 103,206
----------- -----------
Total inventories 233,583 233,700
Prepaid taxes 46,541 60,661
Other current assets 61,888 62,361
----------- -----------
Total current assets 812,447 779,608
Property, plant, and equipment 1,133,599 1,117,939
Less accumulated depreciation and amortiz 613,281 590,520
----------- -----------
Net property, plant, and equipment 520,318 527,419
Other assets 119,097 147,718
----------- -----------
TOTAL ASSETS $ 1,451,862 $ 1,454,745
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 26,930 $ 28,632
Accounts payable 57,233 67,102
Other accrued liabilities 166,701 183,479
Income taxes 24,706 22,943
Current maturities of long-term debt 15,822 1,042
----------- -----------
Total current liabilities 291,392 303,198
Long-term debt 242,143 263,552
Deferred income taxes 26,267 35,002
Other long-term liabilities 95,592 98,215
Minority interests 5,853 5,120
Commitments and contingencies (See notes)
Stockholders' equity:
Preferred Stock, $1.00 par value
Authorized: 15,000,000 shares; Issued: none -- --
Common Stock, $1.00 par value
Authorized: 72,150,000 shares
Issued: 44,492,628 and 43,897,275 shares, respectively 44,493 43,897
Additional contributed capital 398,188 380,127
Retained earnings 318,355 272,657
Currency translation 42,582 61,946
Treasury Stock, at cost (212,368 and 226,640 shares,
respectively) (11,766) (8,330)
Other (1,237) (639)
----------- -----------
Total stockholders' equity 790,615 749,658
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,451,862 $ 1,454,745
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
2
<PAGE> 5
RAYCHEM CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31 (IN THOUSANDS) 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 57,532 $ (36,124)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for restructuring and divestitures, net of payments (1,833) 20,196
Loss on formation of Ericsson Raynet joint venture -- 14,950
Equity in net losses of affiliated companies 28,860 37,316
Extraordinary loss related to early retirement of debt -- (1,043)
Change in accounting principle -- 1,477
Net loss on disposal of other property, plant, and equipment 750 --
Gain on sale of investment (584) --
Depreciation and amortization 39,429 32,994
Deferred income tax provision (benefit) 63 (680)
Changes in certain assets and liabilities, net of effects from
restructuring and divestitures, joint venture formation,
extraordinary item, and change in accounting principle:
Accounts receivable (4,172) (867)
Inventories (6,035) (2,532)
Accounts payable and accrued liabilities (9,092) (28,356)
Income taxes 6,298 (2,173)
Other assets and liabilities 8,517 (708)
--------- ---------
Net cash provided by operating activities 119,733 34,450
--------- ---------
Cash flows from investing activities:
Investment in property, plant, and equipment (43,078) (49,166)
Disposition of property, plant, and equipment 841 5,102
Advances to affiliated companies (26,400) (16,794)
Proceeds from sale of specified Raynet assets -- 40,000
Proceeds from sale of investment 3,124 --
Purchase of investment -- (1,000)
--------- ---------
Net cash used in investing activities (65,513) (21,858)
--------- ---------
Cash flows from financing activities:
Net proceeds from short-term debt (833) 3,085
Proceeds from long-term debt -- 225,378
Payments of long-term debt (1,148) (212,043)
Common Stock issued under employee
benefit plans 33,725 18,396
Common Stock repurchased (25,047) (2,013)
Proceeds from repayments of stockholder notes receivable 314 278
Cash dividends (7,069) (6,955)
--------- ---------
Net cash provided by financing activities (58) 26,126
--------- ---------
Effect of exchange rate changes on cash
and cash equivalents (3,239) (2,221)
--------- ---------
Increase in cash and cash equivalents 50,923 36,497
Cash and cash equivalents at beginning
of period 118,067 78,090
--------- ---------
Cash and cash equivalents at end of period $ 168,990 $ 114,587
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest (net of amounts capitalized) $ 10,290 $ 16,588
Income taxes (net of refunds) 12,401 10,687
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 6
RAYCHEM CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
STATEMENT OF ACCOUNTING PRESENTATION
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements include all adjustments, including normal recurring
accruals, necessary to present fairly the results of operations for the three
and six months ended December 31, 1995 and 1994, the financial position as of
December 31, 1995, and the cash flows for the six months ended December 31, 1995
and 1994. The June 30, 1995 balance sheet included is derived from the
consolidated financial statements included in the company's Annual Report on
Form 10-K for the year ended June 30, 1995. Certain prior-period amounts have
been reclassified to conform with the 1996 financial statement presentation.
BUSINESS SEGMENTS
Revenues and operating income (loss) by business segment are as follows:
<TABLE>
<CAPTION>
in thousands
----------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
------------------------ --------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Electronics $ 158,835 $ 144,891 $ 316,690 $ 284,990
Industrial 140,598 130,558 280,417 252,420
Telecommunications 111,618 107,045 224,459 213,229
--------- --------- --------- ---------
Total revenues $ 411,051 $ 382,494 $ 821,566 $ 750,639
========= ========= ========= =========
Operating income (loss) before
provision for restructuring and
loss on formation of JV and
other Raynet items
Electronics $ 27,568 $ 24,566 $ 60,048 $ 47,068
Industrial 27,733 28,112 59,760 51,541
Telecommunications 23,553 16,442 48,208 33,709
Corporate (29,097) (21,289) (55,162) (41,623)
--------- --------- --------- ---------
Total operating income $ 49,757 $ 47,831 $ 112,854 $ 90,695
========= ========= ========= =========
Operating income (loss) including
provision for restructuring and
loss on formation of JV and
other Raynet items
Electronics $ 27,568 $ 24,566 $ 60,048 $ 47,068
Industrial 27,733 28,112 59,760 51,541
Telecommunications 23,553 16,442 48,208 9,809
Corporate (29,097) (20,866) (55,162) (72,923)
--------- --------- --------- ---------
Total operating income $ 49,757 $ 48,254 $ 112,854 $ 35,495
========= ========= ========= =========
</TABLE>
4
<PAGE> 7
RAYNET
Raynet Corporation and subsidiaries (Raynet) was consolidated in prior years
when it was wholly owned by the company. On November 16, 1994, the company
formed a joint venture, Ericsson Raynet, with LM Ericsson (Ericsson), a Swedish
telecommunications company. Consequently, Raychem changed its Raynet accounting
in 1995 from consolidation to the equity method. Raychem revenues and expenses
for the first quarter of 1995 have been restated to account for Raynet in
accordance with the equity method of accounting. The equity in Ericsson Raynet
net loss for the six-month period ended December 31, 1994, reflects the results
of Raynet Corporation and subsidiaries through November 16, 1994. See
"Investments" note for summarized Ericsson Raynet financial information. See
also "Subsequent Events" note.
RECENT ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." The statement requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The statement also requires
that long-lived assets and certain identifiable intangibles to be disposed of be
reported at the lower of carrying amount or fair value less cost to sell, except
for assets that are covered by APB Opinion No. 30. The statement must be adopted
by the first quarter of 1997. The company has not yet fully determined the
impact of adoption, if any, on the company's results of operations or financial
condition.
In October 1995, the FASB issued Statement No. 123 (FAS 123), "Accounting for
Stock-Based Compensation." This statement defines a "fair value based method" of
accounting for an employee stock option or similar equity instrument. However,
the statement does not require companies to adopt the fair value based method.
The company will continue to use the "intrinsic value based method" of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." FAS 123 requires companies that continue with the accounting in APB
Opinion No. 25 to make pro forma disclosures of net income and earnings per
share, as if the fair value based method of accounting had been applied. The
company must adopt the disclosure requirements for the year ending June 30,
1997.
FINANCIAL INSTRUMENTS
Gains and losses from forward exchange contracts used to hedge receivables and
payables and anticipated transactions totaled $1.4 million gain and $0.4 million
gain for the three months ended December 31, 1995 and 1994, respectively. Gains
and losses from forward exchange contracts totaled $4.1 million gain for each of
the six months ended December 31, 1995 and 1994. The company incurred total
foreign exchange transaction losses of $0.4 million and $1.6 million for the
three months ended December 31, 1995 and 1994, respectively. Total foreign
exchange transaction losses totaled $1.5 million and $3.6 million for the six
months ended December 31, 1995 and 1994, respectively. The related realized and
unrealized gains and losses are included in "Other (income) expense, net." The
total amount of foreign exchange exposure hedged was $224 million and $155
million at December 31, 1995 and 1994, respectively. The company hedges
exposures that arise from trade and intercompany receivables and payables
(including anticipated transactions), and loans in non-functional currencies.
The company has unhedged non-functional currency translation and transaction
exposures in countries whose currencies do not have a liquid, cost-effective
forward market available for hedging. Such exposures at December 31, 1995,
included $11.4 million in net intercompany
5
<PAGE> 8
payables in non-functional currencies and $8.8 million of net monetary assets in
foreign countries with the U.S. dollar as functional currency.
RESTRUCTURING AND DIVESTITURES
The core business incurred a pretax charge of $24 million in the first quarter
of 1995 for the restructuring of its telecommunications business segment. All
charges, excluding asset writedowns, were cash in nature, substantially incurred
in 1995, and funded through operating cash flows. The following table sets forth
the company's restructuring reserves as of December 31, 1995:
<TABLE>
<CAPTION>
Restructuring Reserves
----------------------
Employee Asset
Severance Writedowns Leases Other Total
--------- ---------- ------ ----- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Reserve Balances, June 30, 1995: $ 2,162 $ - $ - $ 1,015 $ 3,177
Cash payments (Unaudited) (1,178) - - (655) (1,833)
------- ---- ---- ------- -------
RESERVE BALANCES,
DECEMBER 31, 1995 (UNAUDITED): $ 984 $ - $ - $ 360 $ 1,344
======= ==== ==== ======= =======
</TABLE>
INVESTMENTS
The financial position and results of operations of Ericsson Raynet, the only
significant equity investment of the company, is summarized below:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------- ---------------------------
1995 1994(a) 1995 1994(a)
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Revenues $ 12,462 $ 6,959 $ 24,902 $ 29,515
======== ======== ======== ========
Gross profit (loss) $(10,520) $ (5,990) $(12,407) $ (8,959)
Research and development
expense 10,314 8,922 20,012 20,646
Selling, general, and
administrative expense 9,000 9,687 17,428 19,626
Interest and other
(income) expense, net (513) 865 598 909
-------- -------- -------- --------
Net loss $(29,321) $(25,464) $(50,445) $(50,140)
======== ======== ======== ========
Raychem's equity in loss $(18,694) $(13,532) $(29,818) $(38,208)
======== ======== ======== ========
</TABLE>
(a) Results for the three and six months ended December 31, 1994, include the
results of Raynet Corporation and subsidiaries through November 16, 1994,
and the results of Ericsson Raynet from November 17, through December 31,
1994, on the equity basis of accounting as reflected in Raychem's financial
statements.
6
<PAGE> 9
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, June 30,
1995 1995
------------- --------
<S> <C> <C>
Current assets $ 65,125 $ 62,864
Non-current assets 24,703 34,203
Current liabilities $ 109,426 $ 65,906
Non-current liabilities 550 495
</TABLE>
REPURCHASE OF COMMON STOCK
In December 1994, the Board of Directors authorized the repurchase, at
management's discretion, of up to 1.5 million shares of the company's stock
during any one fiscal year. Shares repurchased under this authorization will be
used to offset the dilution caused by the company's employee stock plans. During
the three months ended December 31, 1995, the company repurchased 400,000 shares
and subsequently reissued 218,946 shares, leaving 212,368 shares in treasury
stock at December 31, 1995.
CONTINGENCIES
The company has been named, among others, as a potentially responsible party
("PRP") in administrative proceedings alleging that it may be liable for the
costs of correcting environmental conditions at certain hazardous waste sites.
At all of the sites, the company is alleged to be a de minimis generator of
hazardous wastes, and the company believes that it has limited or no liability
for cleanup costs at these sites. The company has also been notified by a state
environmental agency that it may be required to investigate the need for
remedial work at one of its manufacturing sites. The company is currently
conducting such investigations on a voluntary basis. The company and its
subsidiaries have also been named as a defendant, along with sixteen other
corporate and governmental codefendants, in a private cost recovery for
environmental cleanup expenses at the West Contra Costa County Landfill in
Richmond, California. On August 4, 1995, the company's and other defendants'
motion for judgment on the pleadings was granted by the District Court striking
the plaintiff's claim that the company and the other defendants were jointly and
severally liable for response costs at the site. As a result, the company's
potential liability, if any, for response costs at the site would be based on
the company's disposal of wastes at the site. The company believes its wastes
constitute less than 2% of the total amount of wastes disposed of at the site.
From time to time, the company and its subsidiaries become involved in lawsuits
arising from various commercial matters, including product liability. The
principal product liability litigation involves a variety of claims arising from
the company's heat-tracing and freeze-protection products. The only such action
in which material damages are alleged seeks in excess of $150 million, but the
claim has not progressed sufficiently for the company to estimate a range of
possible loss, if any. The company intends to defend itself vigorously in these
matters. The company's experience to date is that losses, if any, from such
claims have not had, nor are they expected to have, a material effect on the
company's financial position or results of operations. The company maintains
insurance to cover product liability claims in excess of deductibles.
Legal proceedings tend to be unpredictable and costly. Based on currently
available information, however, management believes that the resolution of
pending claims, regulatory inquiries, and legal proceedings will not have a
material adverse effect on the company's operating results or financial
position.
7
<PAGE> 10
SUBSEQUENT EVENTS
On January 17, 1996, the company reached a preliminary agreement with Ericsson
that will eliminate future operating losses from the Ericsson Raynet joint
venture, while providing the possibility of a very modest upside for the
company. The parties are in the process of negotiating definitive agreements,
which are expected to be completed in the third quarter, and may result in a
charge of up to $10 million, principally non-cash.
On January 17, 1996, the company's Board of Directors declared a quarterly cash
dividend of $0.10 per share of Common Stock, payable on March 13, 1996, to
stockholders of record as of February 14, 1996.
8
<PAGE> 11
RAYCHEM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The company reported net income of $25 million, or $0.55 per share, in the
second quarter of 1996, compared to a net income of $21 million, or $0.47 per
share, in the second quarter of 1995. Revenues for the quarter increased to $411
million from $382 million in the comparable prior-year period. This represents a
5% increase over the year-ago quarter on a constant currency basis (which
assumes that foreign currency exchange rates had remained constant from the
prior period). For the six months ended December 31, 1995, net income was $58
million, or $1.27 per share, compared to a net loss of $36 million, or $0.83 per
share, for the same period in the prior year. Revenues for the six-month period
ended December 31, 1995, increased 6% over the prior-year period on a constant
currency basis, to $822 million.
Raychem's "ongoing" pretax income for the second quarter of 1996 increased to
$59 million from $44 million in the year-ago quarter. Raychem's results are
summarized as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
PRETAX INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM AND CHANGE Three Months Ended Six Months Ended
IN ACCOUNTING PRINCIPLE December 31, December 31,
(in millions) 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Core business:
"Ongoing" pretax income $ 59 $ 44 $ 116 $ 79
Nonrecurring charges, net (5) -- (5) --
Provision for restructuring
and divestitures -- -- -- (24)
---- ---- ----- ----
Core business pretax income 54 44 111 55
Loss on formation of Ericsson Raynet joint
venture and other Raynet items -- -- -- (32)
Equity in Ericsson Raynet net loss (19) (13) (30) (38)
---- ---- ----- ----
Consolidated $ 35 $ 31 $ 81 $(15)
==== ==== ===== ====
- -----------------------------------------------------------------------------------------------------------
</TABLE>
During the second quarter of 1996, the company recorded a net $5 million of
nonrecurring charges. This amount reflects a $6.6 million gain (included in
"other (income) expense") from an insurance settlement arising from a previous
shareholder lawsuit, offset by $12 million of charges incurred from severances
and other related actions that took place in the quarter.
Net income for the six months ended December 31, 1994, includes an extraordinary
loss of $6.3 million (recorded as $7.1 million in the first quarter and adjusted
by $0.8 million in the second quarter), or $0.15 per share, for the early
retirement of debt following payment by the company of its 9.55% privately
placed senior notes. In addition, the company adopted
9
<PAGE> 12
in the first quarter, effective July 1, 1994, Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits." The
cumulative effect of this accounting change (a charge of $1.5 million, or $0.03
per share) has been reflected in the 1995 first half results.
The following discussion of the results of operations is based on the company's
business segments--electronics, industrial, and telecommunications (which, along
with the corporate groups, are referred to collectively as the "core business").
BUSINESS SEGMENT OPERATIONS
Revenues in the electronics business segment were $159 million in the second
quarter of 1996 compared to $145 million in the prior-year quarter, an 8%
constant currency increase. The Electronics Division and Elo TouchSystems
contributed significantly to the revenue growth. The Electronics Division's
strong sales growth in commercial air, marine, and general electronics markets,
more than offset modest declines in its defense program business. Elo
TouchSystems experienced strong growth with increases in its touchscreen sales
to manufacturers of point-of-information and point-of-sales equipment.
PolySwitch Division revenues rose slightly over the prior-year quarter. A
significant increase in shipment unit volume was largely offset by price
reductions. Electronic business segment operating income grew to $28 million
from $25 million a year ago. These results include approximately $1 million of
one-time charges for severances and other related actions in the quarter.
Revenues for the six months ended December 31, 1995, increased to $317 million
from $285 million in the comparable prior-year period. Operating income for the
six months ended December 31, 1995, was $60 million compared to $47 million in
the comparable prior-year period, reflecting improved results primarily by the
Electronics Division.
Revenues in the industrial business segment for the three months ended December
31, 1995, were $141 million, up from $131 million, a 4% constant currency
increase over the prior-year period. The revenue growth was led by the segment's
Electrical Products Division, which had especially strong sales in Asia. The
pipeline project business in the Ultratec Division led to an increase of its
revenues, notably in Asia. Chemelex Division revenues remained unchanged
compared to the prior-year level, with slow sales growth in the European
construction market. Operating income in the industrial business segment for the
second quarter of 1996 was $28 million, unchanged from the year-ago period. The
current quarter's operating income includes approximately $6 million in charges
primarily related to the streamlining of the Chemelex Division's worldwide
operations. Industrial business segment revenues for the six months ended
December 31, 1995, were $280 million compared to $252 million in the comparable
prior-year period. Operating income was $60 million, $8 million higher than the
comparable prior-year period. The increase in operating income reflects strong
revenues in the Electrical Products Division, partially offset by Chemelex
Division's lower revenues in the European construction market and U.S. market
for freeze protection products.
Revenues in the telecommunications business segment increased to $112 million
from $107 million in the second quarter of the prior year, a 2% increase in
constant currency terms from the prior-year quarter. The segment's increase in
North America and Latin America sales was partially offset by a decrease in
sales in Asia and Europe. Operating income increased to $24 million from $16
million in the year-ago quarter, reflecting benefits of prior-year restructuring
actions. The current quarter results include approximately $1 million in
one-time charges for severances and other related actions. Revenues for the six
months ended December 31, 1995, increased to $224 million from $213 million in
the
10
<PAGE> 13
comparable prior-year period. Excluding the restructuring charge incurred in the
prior-year first quarter, operating income increased from $34 million to $48
million. This increase resulted from both favorable product mix and benefits of
prior-year restructuring actions.
During the second quarter of 1996, incoming orders were greater than shipments
for the company overall. Electronics segment orders exceeded shipments and
incoming orders approximately equaled shipments in the industrial and
telecommunications segments. Backlog at December 31, 1995, was $288 million.
EQUITY IN ERICSSON RAYNET NET LOSS
Ericsson Raynet's net loss for the second quarter of 1996 was $29 million. Net
loss for the six months ended December 31, 1995, was $50 million. As agreed
between the partners, in fiscal 1996, the first $19.6 million of losses will be
allocated to LM Ericsson (Ericsson) and Raychem in a 51/49 ratio; the next $10
million of loss will be allocated 100% to Raychem; and additional losses, if
any, will again be allocated to Ericsson and Raychem in a 51/49 ratio. In
accordance with the loss allocation agreement, the company's share of the
Ericsson Raynet second quarter net loss was $19 million, and totaled $30 million
for the six months ended December 31, 1995.
PROVISION FOR RESTRUCTURING AND DIVESTITURES
The core business incurred a pretax charge of $24 million in the first quarter
of 1995 for the restructuring of its telecommunications business segment. The
restructuring was substantially completed by June 30, 1995. The company expected
to receive approximately $24 million of annual savings, of which the company
realized approximately $12 million of savings in the first half of 1996.
Substantially all of the savings are cash related.
See "Restructuring and Divestitures" in the notes to consolidated condensed
financial statements for further details on the restructuring reserve.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
Selling, general, and administrative expense (SG&A) as a percent of revenues for
the three months ended December 31, 1995, increased to 33% from 32% in the
year-ago period. However, in the current period, SG&A includes approximately $10
million in nonrecurring charges, reflecting $7 million in the business segments
and $3 million in the corporate groups. The charge to corporate groups is
principally related to officer severances. Excluding these nonrecurring charges,
SG&A as a percent of revenues for the second quarter of 1996 improved to 30%.
INCOME TAXES
The estimated core business annual effective tax rate was 21% for the six months
ended December 31, 1995, down from 25% for the year-ago period, and 23% for the
three months ended September 30, 1995. The decrease results primarily from an
anticipated improvement in fiscal 1996 U.S. profitability enabling the
utilization of prior years' U.S. losses.
RECENT ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." For a description, see "Recent
Accounting Standards" in the notes to consolidated condensed financial
statements. The statement must be adopted by the first
11
<PAGE> 14
quarter of fiscal 1997. The company has not yet fully determined the impact of
adoption, if any, on the company's results of operations or financial condition.
In October 1995, the FASB issued Statement No. 123, "Accounting for Stock-Based
Compensation." For a description of the statement, see "Recent Accounting
Standards" in the notes to consolidated condensed financial statements. The
company must adopt the disclosure requirements for the fiscal year ending June
30, 1997.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
FORWARD-LOOKING STATEMENTS
On January 17, 1996, the company reached a preliminary agreement with Ericsson
that will eliminate future operating losses from the Ericsson Raynet joint
venture, while providing the possibility of a very modest upside for the
company. The parties are in the process of negotiating definitive agreements,
which are expected to be completed in the third quarter, and may result in a
charge of up to $10 million, principally non-cash. While the company is in the
process of negotiating definitive agreements with Ericsson on the Ericsson
Raynet joint venture, there can be no assurance of the expected outcome or the
effect on the company's financial results until such time that the agreements
are finalized and all the required approvals have been received. While there is
the potential for some future charges related to warranty claims, the company
believes that Ericsson Raynet's existing warranty reserves are adequate.
The company has embarked on an "Operational Excellence" program to improve
operational efficiency in all areas of the company, and to reduce SG&A costs.
The program focuses on vigorous process improvements across organizational
boundaries. As part of this program, the company has incurred some nonrecurring
charges during the second quarter, and expects to incur additional nonrecurring
charges in the third quarter. In aggregate, the company currently estimates that
these potential charges may range from $25 to $40 million during the third
quarter. However, reviews are currently underway and further actions may yet be
identified that could result in additional charges in the third quarter and
future quarters.
The company is also evaluating the sale or reconfiguration of its medical and
metals businesses contained in the electronics business segment. In addition,
the company is evaluating the sale or closure of Ultratec's plastic pipe
coupling business. Any related actions are expected to occur in the third or
fourth quarter of 1996.
The company has a deferred tax asset valuation allowance which is primarily
attributable to U.S. federal and state deferred tax assets. Realization of the
deferred tax assets is dependent on generating sufficient U.S. income to utilize
future deductions and credits, prior to the expiration of these carryforwards.
Management believes sufficient uncertainty exists regarding the realization of
these deferred tax assets that a valuation allowance is required. The amount of
the valuation allowance may be reduced as U.S. income improves.
RISK FACTORS
As the Operational Excellence program is ongoing, the company expects to incur
additional nonrecurring charges as a result of future actions. These actions,
however, are not defined at this time. In addition, while not currently
anticipated, the company's operating results
12
<PAGE> 15
and financial condition could be adversely affected by its ability to
effectively manage the transition to the new organizational and operating
structures. There can be no assurance that the Operational Excellence program
will be successful in achieving its goals, or in doing so without unintended
adverse consequences.
The company has manufacturing facilities in many countries and is subject to
environmental regulations. These regulations, and any changes in them, can
affect the company's manufacturing processes as well as the cost, availability,
and use of raw materials. Although compliance with such environmental
regulations has not had a material effect on capital expenditures or operating
results in the past, there is no assurance that any such regulations or changes
in regulations will not have a material adverse effect on future capital
expenditures or operating results.
In the past, supplies of certain raw materials the company uses have become
limited and it is possible that this will occur in the future. When it does
occur, it can result in increased prices, rationing, and shortages. In response,
the company tries to identify alternative materials and technologies for such
raw materials or other sources of supply. Although the effect in the past has
not been material, such situations could adversely affect financial results.
From time to time, the company and/or its subsidiaries become involved in
lawsuits arising from various commercial matters, including, but not limited to,
competitive issues, contract issues, intellectual property matters and product
liability. Currently, the principal product liability litigation involves a
variety of claims arising from the company's heat-tracing and freeze-protection
products. Litigation tends to be unpredictable and costly. There is no assurance
that litigation will not have an adverse effect on the company's financial
position or results of operations.
Over half of the company's revenues result from sales outside the United States
and the company has several production facilities also located outside the
United States. The company's financial results can be adversely affected by
changes in foreign currency rates, changes in worldwide economic conditions,
changes in trade policies or tariffs, changes in interest rates, and political
unrest overseas. These effects may be mitigated by the global nature of both the
company's sales and production activities.
The company has a substantial investment in intellectual properties consisting
of patents, trademarks, copyrights, and trade secrets and relies significantly
on the protection provided by these intellectual property rights. Accordingly,
the company aggressively protects these rights and may become involved in issues
of infringement or theft by third parties from time to time. The company may
also become involved as a defendant in intellectual property lawsuits.
Litigation can be unpredictable and costly. While it is doubtful that an
unfavorable resolution of any such dispute would have a material adverse effect
on the company's financial condition, it is possible that an unfavorable outcome
could be material.
The company maintains property, cargo, auto, product, general liability, and
directors and officers liability insurance to protect itself against potential
loss exposures. To the extent that losses occur, there could be an adverse
effect on the company's financial results depending on the nature of the loss,
and the level of insurance coverage maintained by the company. From time to
time, the company may reevaluate and change the types and levels of insurance
coverage that it purchases.
13
<PAGE> 16
The company has historically achieved revenue growth by developing or acquiring
new and innovative materials science technologies and products. Commitment to
continued research and development and acquisition of new or compatible
technologies continues to be an important part of the company's strategy. To the
extent that product or technology development or integration of acquired
technologies takes longer than expected or is not successful, there could be an
adverse effect on the company's financial results.
The company's operating results are subject to fluctuations in demand and
seasonal activity of certain product lines. A substantial amount of the
company's revenues are realized through orders and shipments booked within a
quarter and the backlog at the end of any quarter may not be predictive of the
financial results for the next quarter. A shortfall in revenue could result from
a number of factors such as overall economic conditions, competition, lower than
expected demand, or supply constraints. In addition, changes in geographic or
product mix may impact gross profits.
A portion of the company's research and development activities, its corporate
headquarters, and other critical business operations are located near major
earthquake faults. In the event of a major earthquake, the ultimate impact on
the company, significant suppliers, and the general infrastructure is unknown,
but operating results could be materially affected. The company is predominantly
not insured for losses and interruptions caused by earthquakes.
Because of the foregoing factors, in addition to other factors, which affect the
company's operating results and financial position, past financial performance
should not be considered to be a reliable indicator of future performance.
Investors should not use historical trends to anticipate results or trends in
future periods. Further, the company's stock price is subject to volatility. Any
of the factors discussed above could have an adverse impact on the company's
stock price. In addition, failure of revenues or earnings in any quarter to meet
the investment community's expectations, as well as broader market trends, could
have an adverse impact on the company's stock price.
LIQUIDITY AND CAPITAL RESOURCES
Debt exceeded cash by $116 million at December 31, 1995, compared to $175
million at June 30, 1995. Debt net of cash decreased $59 million in the first
six months of 1996, compared to a decrease of $26 million in the first six
months of 1995. The continued decrease in debt net of cash resulted primarily
from improved profitability.
Inventory, as measured by the number of days of inventory on hand, improved to
106 days for the second quarter of 1996 compared to 109 days for the year-ago
period. Receivables, as measured by the number of billing days outstanding,
decreased to 63 days at December 31, 1995, compared to 64 days at December 31,
1994.
On September 28, 1995, the company amended its syndicated loan agreements which
consisted of a five-year partially amortizing term loan of $225 million, and a
renewable 364-day revolving credit facility of $200 million. The revolving
credit facility was increased to $250 million and extended to a term of 4 years.
Variable pricing terms for both the term loan and revolving credit facility were
improved, and certain restrictive covenants were relaxed. The $225 million
syndicated term loan agreement requires varying quarterly
14
<PAGE> 17
payments beginning in December 1996 and continuing until final maturity in
September 1999. The first quarterly payment of $15 million will become due
December 31, 1996.
In January 1995, the company entered into a revolving credit agreement with the
Ericsson Raynet joint venture. The company agreed to make available to the joint
venture a maximum of $50 million, due in full on December 20, 1995, or earlier
if the revolving credit arrangement is terminated at the company's discretion.
Upon expiration, the credit agreement was renewed and extended one year, and is
now due in full on December 20, 1996. The credit agreement stipulates that
borrowings under the arrangement will be interest-free, and imposes no covenants
on the joint venture. During the quarter ended December 31, 1995, the company
made advances to Ericsson Raynet of $13 million under this credit agreement,
increasing the amount due to the company to $21 million. If the agreement
currently being negotiated with Ericsson is completed, the company intends to
convert the amount due under the revolving credit agreement to capital.
BellSouth Enterprises Inc. (BSE) had financed a portion of the software
development work at Raynet and held a royalty interest in the software related
revenues of Raynet. With the creation of the joint venture, this royalty payment
was reconfigured. Raychem made two payments to BSE of $10 million each in
November 1994 and 1995, and is required to make one additional payment of $10
million in November 1996. Raychem has agreed to make other royalty payments to
BSE contingent upon the revenues and earnings performance of the joint venture.
BSE will be entitled to receive a portion of the distributions that Raychem is
entitled to receive as a result of the agreement currently being negotiated with
Ericsson.
The company has continued to repurchase shares of the company's stock as
previously authorized by the Board of Directors. During the six months ended
December 31, 1995, the company repurchased 500,000 shares at a cost of $25
million. In addition, the company received $34 million from the issuance of
Common Stock under various employee benefit plans for the six months ended
December 31, 1995.
On January 17, 1996, the company's Board of Directors declared a 25% increase to
its regular quarterly dividend to $0.10 per share, payable on March 13, 1996, to
stockholders of record as of February 14, 1996.
Capital expenditures of $43 million in the first half of 1996 decreased $6
million compared to the prior-year period, when the company had significant
capital expenditures for manufacturing facilities in Japan, the People's
Republic of China, and Mexico.
At December 31, 1995, the company had $169 million in cash and cash equivalents,
$290 million in committed credit facilities (of which $1 million were utilized)
and approximately $175 million in various uncommitted credit facilities (of
which $44 million were utilized).
The combination of cash and cash equivalents, available lines of credit, and
future cash flows from operations are expected to be sufficient to satisfy
substantially all the company's needs for working capital, normal capital
expenditures, Ericsson Raynet funding requirements, scheduled debt repayments,
and anticipated dividends.
15
<PAGE> 18
RAYCHEM CORPORATION
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
In the second quarter, the company settled litigation, Raychem Corporation v.
Federal Insurance Company, with its insurers arising from an earlier shareholder
lawsuit. The Company received $6.6 million from its insurers. Information about
this lawsuit was disclosed in the company's annual report on Form 10-K for the
year ended June 30, 1995.
The plaintiffs in the All Alaskan Seafoods, Inc., et al v. Raychem Corporation,
Marine Electric, Inc., and Westinghouse Electrical Supply Co., have increased
their claim for damages to approximately $150 million. Information about this
lawsuit was disclosed in the company's annual report on Form 10-K for the year
ended June 30, 1995, and quarterly report on Form 10-Q for the period ended
September 30, 1995.
The patent infringement lawsuit filed by the company on November 30, 1993,
against PSI Telecommunications, Inc. in the United States District Court,
Northern District of California, has been settled. Information about this
lawsuit was disclosed in the company's annual report on Form 10-K for the year
ended June 30, 1995.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On November 1, 1995, the company held its Annual Meeting of the
Stockholders.
(b) The following Directors were elected:
<TABLE>
<CAPTION>
Votes
Name Votes For Withheld
---- ---------- ---------
<S> <C> <C>
Paul M. Cook 34,716,848 1,600,515
Richard Dulude 34,719,572 1,597,791
James F. Gibbons 34,719,979 1,597,384
Richard A. Kashnow 34,703,127 1,614,237
John P. McTague 34,719,282 1,598,081
Dean O. Morton 34,720,721 1,596,642
Isaac Stein 34,708,417 1,608,947
Cyril J. Yansouni 34,720,631 1,596,732
</TABLE>
(c) The following other matters were voted upon:
1. Approval of amendment to the company's Amended and Restated
1984 Employee Stock Purchase Plan and Amended and Restated 1985
Supplemental Employee Stock Purchase Plan to increase by
1,000,000 shares the aggregate number of shares issuable under
the two plans.
<TABLE>
<S> <C>
Affirmative Votes: 30,819,842
Negative Votes: 1,124,497
Abstentions: 1,492,021
</TABLE>
16
<PAGE> 19
2. Approval of an amendment to the company's Amended and Restated
1990 Incentive Plan to increase by 1,250,000 shares the
aggregate number of shares issuable under the plan.
<TABLE>
<S> <C>
Affirmative Votes: 23,710,255
Negative Votes: 8,139,355
Abstentions: 1,586,750
</TABLE>
3. Ratification of the appointment by the company's Board of
Directors of Price Waterhouse LLP to audit the accounts of the
company and its subsidiaries for the 1996 fiscal year.
<TABLE>
<S> <C>
Affirmative Votes: 34,782,093
Negative Votes: 40,638
Abstentions: 1,494,632
</TABLE>
ITEM 5: OTHER INFORMATION
On October 1, 1995, Richard A. Kashnow was named President, CEO, and Chairman of
the Board of Directors of the company. He succeeded both Raychem President and
CEO Robert J. Saldich, and Raychem founder and Chairman of the Board of
Directors Paul M. Cook, who will continue as a director until his scheduled
retirement in 1996.
In November 1995, the company eliminated the senior management positions of
Executive Vice President and Senior Vice President, Corporate Development held
by Harry O. Postlewait and Charles J. Abbe, respectively. On January 2, 1996,
Harry O. Postlewait retired from Raychem, and Charles J. Abbe left the company.
On December 1, 1995, the company announced that as of April 1996 the position of
Senior Vice President, Europe, held by James B. Spradling, will be eliminated.
James B. Spradling announced his intention to retire from the company. Further,
the company announced that the Ultratec Division will be combined with the
Chemelex Division under the leadership of Hus Tigli, Vice President and General
Manager of the Chemelex Division. Rik P. Dobbelaere, who was General Manager of
the Ultratec Division, has decided to leave Raychem. Lastly, the company
announced that the Elo TouchSystems business and Display Products Group now
report to Andrew F. Roake, Vice President, Strategic Planning.
On December 11, 1995, L. Frans Berthels was appointed to the newly formed
position of Vice President, Manufacturing and Logistics.
In January 1996 the company announced several senior management changes. Robert
J. Vizas, Vice President, General Counsel and Secretary, has decided to leave
Raychem and resume his career as a legal consultant. Stephen A. Balogh, Vice
President of Human Resources, also will leave the company to pursue outside
opportunities. Searches are underway to fill both positions. Separately, Eric
Van Zele was named Vice President, Europe and will return to Belgium where he
will also assume primary business responsibility for the European sales and
marketing activities for the Telecom Division. Additionally, James L. Claypool,
Vice President, will return to California in June to lead the Menlo Park Telecom
Resource Center.
17
<PAGE> 20
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10(s) Supplemental agreement between the company
and Mr. Richard Kashnow dated February 5, 1996
10(t) Agreement and release between the company and
Mr. Harry O. Postlewait dated November 16,
1995
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RAYCHEM CORPORATION
-------------------
(Registrant)
Date: February 14, 1996 /s/ RAYMOND J. SIMS
----------------------------------
Raymond J. Sims
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ DEIDRA D. BARSOTTI
----------------------------------
Deidra D. Barsotti
Vice President and
Controller
(Principal Accounting Officer)
19
<PAGE> 1
Exhibit 10(s)
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement is entered into between Richard
Kashnow ("Kashnow") and Raychem Corporation ("Raychem") to modify one provision
of their letter agreement describing the terms of Kashnow's employment by
Raychem dated August 11, 1995 (the "Agreement"). The parties hereto agree as
follows:
1. SPECIAL TRANSITION PAYMENT
(A) With respect to the total amount payable by
Raychem under the "Special Transition Payment" provisions of paragraph 3 of the
Agreement, which amount is indeterminable as of the date hereof, Raychem shall
pay such amount to the trust established in connection with the Raychem
Corporation Executive Deferred Compensation Plan (the "Deferred Compensation
Plan") and credit such amount to an account for Kashnow under the Deferred
Compensation Plan on the day such amount would otherwise have been paid to
Kashnow in satisfaction of Raychem's payment obligation under the Agreement.
(B) The amount described in subparagraph (a) above
which is credited to an account for Kashnow under the Deferred Compensation Plan
shall be treated as a "Deferral Amount" for the "Participation Year" ending June
30, 1996, subject to all of the general terms and conditions of the Deferred
Compensation Plan. Accordingly, 100 percent of such
<PAGE> 2
Deferral Amount (as adjusted for net investment income or loss attributable
thereto) will be determined as of December 31, 1996, and distributed to Kashnow
as soon as practicable thereafter unless Kashnow files a "Subsequent Deferral
Election" with the Administrator of the Deferred Compensation Plan on or before
June 3, 1996 to defer payment of all or any portion of the amount otherwise
distributable for an additional one-year period (or such longer period as is
approved by the Administrator).
2. GENERAL
Except as expressly provided otherwise by this Supplemental
Agreement, all of the terms and conditions of the Agreement remain in full force
and effect.
Dated: February 5, 1996 RAYCHEM CORPORATION
By: /s/ Isaac Stein
Dated: February 5, 1996 /s/ R.A. Kashnow
Richard Kashnow
-2-
<PAGE> 1
Exhibit 10(t)
November 16, 1995
Mr. Harry O. Postlewait
(Home address deleted)
Re: Agreement and Release
Dear Harry:
This letter is to confirm our agreement with respect to the termination
of your employment with Raychem Corporation. To ensure that there are no
ambiguities, this letter first explains in detail the rights and obligations of
both you and Raychem Corporation upon termination of your employment. If, in
exchange for a release, you wish to accept additional benefits to which you
would not otherwise be entitled, indicate your agreement by signing, dating, and
returning this letter to me no later than December 13, 1995.
We have agreed that your employment with Raychem Corporation will end
as of the end of the business day on January 2, 1996. Thereafter, you will no
longer be an employee of Raychem. In your final paycheck on January 2, 1996, you
will be paid all earned and unpaid salary together with any accrued and unused
vacation pay, less deductions authorized or required by law. In addition, to
induce Raychem to enter into this Agreement, you agree to enter into the
Professional Services Agreement attached as Exhibit 2. You agree that the
consideration named in this Agreement is sufficient to compensate you for the
release given herein, as well as for any consulting services you may provide to
Raychem pursuant to the Professional Services Agreement.
You will also receive a severance amount equal to one hundred and four
(104) weeks of salary. You may defer FY97 base salary amounts pursuant to the
company's Executive Deferred Compensation Plan, provided that your authorization
form is received by June 1, 1996. This severance benefit, minus deductions
authorized or required by law, will be paid in bi-weekly installments beginning
on the first Raychem payday after January 2, 1996. This salary continuation
shall continue even in the event of your death during the payment period.
At the sole discretion of the Board of Directors, you may be eligible
to receive a prorata share of a bonus pursuant to the FY96 Variable Pay Program.
You will be eligible to receive a lump sum payment from the Raychem
Pension Plan and from the Supplemental Executive Retirement Plan ("SERP") based
on your age and years of service as of January 2, 1996. You will also be
eligible to rollover SERP amounts into the Executive Deferred Compensation Plan
upon your written request received before December 15, 1995.
For purposes of option grants outstanding under the 1988 Executive Long
Term Incentive Plan (ELTIP) and Amended and Restated 1990 Incentive Plan (1990
Plan), you agree that termination due to retirement will occur at the end of
your Raychem consultancy, and that the retirement provisions of your options
will become effective at that time. Your options granted under the ELTIP are
exercisable as follows: for options granted before August 2, 1991,
<PAGE> 2
Harry O. Postlewait
November 16, 1995
within three (3) months after retirement; and for options granted August 2, 1991
or later, within three (3) years after retirement. Your options granted under
the 1990 Plan are exercisable within five (5) years after retirement.
You will continue to be covered with company provided life insurance at
two times (2x) your current annual base pay until you are age sixty-five (65).
In the event you desire to purchase supplemental life insurance up to two
million dollars ($2M), if available, you may do so through Raychem at your own
expense, at normal employee rates for such supplemental insurance.
Your present Raychem medical and dental insurance benefits will remain
in effect, at standard employee rates, until the earliest to occur of (i) your
sixty-fifth (65th) birthday, or (ii) your death.
Raychem shall assign to you title to your company car (a 1992 Toyota
Land Cruiser) and car telephone, effective January 3, 1996. You agree to take
title by January 3, 1996. You also agree to pay for, and hold Raychem harmless
for, all maintenance, insurance, expenses and damages incurred to such car
and/or related to its use from and after January 2, 1996, as well as all monthly
and use charges for the telephone.
Raychem agrees to pay your attorney's fees related to your separation
of employment from Raychem and the negotiation of this Agreement, not to exceed
$2,000.
Raychem will also furnish to you through January 2, 1998, according to
established Raychem practices and policies:
- Continued use of your computer, after which time you may purchase
this item according to company policy.
- Financial planning services.
- Senior Executive career transition services provided by de Recat &
Associates, a professional outplacement firm selected by Raychem
to support and enhance your job search efforts.
You agree that you will return all company property to Richard A.
Kashnow or designee by January 2, 1996. This includes but is not limited to all
samples, cases, brochures, papers, notes, and other documents, and all copies
thereof, relating to Raychem, its business, and its customers that have been
obtained by you during your employment, together with other Raychem or
Raychem-customer or supplier property in your possession. In addition, please
note that your obligations under the Proprietary Information Agreement still
remain in effect. We have enclosed a copy of that agreement as Exhibit 1 for
your reference.
Raychem is prepared to offer you the consideration set forth herein
above and beyond the wages and benefits to which you would otherwise be entitled
in exchange for your agreement to release all claims, known or unknown, against
Raychem Corporation, its affiliates, and its past, present, and future officers,
directors, shareholders, agents, employees, attorneys,
2
<PAGE> 3
Harry O. Postlewait
November 16, 1995
insurers, successors, and assigns (collectively referred to as "Raychem"). You
are not eligible to receive the additional consideration outlined herein unless
you elect to sign this Agreement.
In consideration, you, on behalf of yourself, your heirs, spouse, and
assigns, hereby completely release and forever discharge Raychem from any and
all claims, of any and every kind, nature, and character, known or unknown,
foreseen or unforeseen, based on any act or omission occurring prior to January
2, 1996, including but not limited to any claims arising out of your offer of
employment, your employment, or termination of your employment with Raychem or
acts leading up to such termination, and all claims under federal and state
discrimination laws, including but not limited to claims arising under the Age
Discrimination in Employment Act of 1967 and the California Fair Employment and
Housing Act. The only exceptions are any claims that you may have for
unemployment compensation, any rights that you may have under the Raychem
Pension Plan, and any Workers' Compensation benefits to which you may be found
entitled.
This Agreement fully and finally extinguishes and discharges all claims
(except for unemployment, Pension Plan, and Workers' Compensation claims
discussed above), whether known or not, as provided by California Civil Code
Section 1542. Section 1542 states:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor."
You agree to waive that right and affirm your intention to release not
only claims known but those unknown to you which arose out of your employment
with Raychem or its termination, and you do hereby release all such known and
unknown claims.
You fully understand that, if in fact with respect to any matter
covered by this Agreement is found hereafter to be other than or different from
the facts now believed by you to be true, you expressly accept and assume that
this Agreement will be and remain effective, notwithstanding such difference in
the facts.
You agree neither to file nor to encourage or knowingly permit another
to file any claim, charge, action, or complaint concerning any matter referred
to in this release. If you have previously filed any such claims (other than
Workers' Compensation claims), you agree to take all reasonable steps to cause
them to be withdrawn without delay.
This letter constitutes the entire agreement between yourself and
Raychem with respect to any matters referred to in this letter and supersedes
any and all of the other agreements between yourself and Raychem, except for the
Proprietary Information Agreement attached hereto as Exhibit 1, the Professional
Services Agreement attached hereto as Exhibit 2, and the Amendment to Loan
Agreement attached hereto as Exhibit 3, which remain in full force and effect.
No other consideration, agreements, representations, oral statements,
understandings, or course of conduct that are not expressly set forth in this
document should be implied or are binding. You are not relying upon any other
agreement, representation, statement, omission, understanding, or course of
conduct that is not expressly set forth in this document. You understand and
agree that this Agreement will not be deemed or construed at any time or for
3
<PAGE> 4
Harry O. Postlewait
November 16, 1995
any purposes as an admission of any liability or wrongdoing by either yourself
or Raychem. You also agree that if any provision of this Agreement is deemed
invalid, the remaining provisions will still be given full force and effect. The
terms and conditions of this Agreement will be governed by the laws of
California applicable to contracts made and performed within California.
Prior to execution of this Agreement, you should apprise yourself of
sufficient relevant information to intelligently exercise your own judgment. You
are advised to consult an attorney. You may take twenty-one (21) days from your
receipt of this letter to consider whether or not you wish to accept benefits
described herein in exchange for this Agreement. Please also note that even if
you do sign this Agreement, you may change your mind and revoke this Agreement
and forego the additional benefits, provided that you notify me in writing,
within seven (7) days after the date of your signing.
You also understand and agree that if any suit is brought to enforce
the provisions of the agreement in this letter, the prevailing party will be
entitled to its costs, expenses, and attorneys' fees as well as any and all
other remedies.
In order to obtain the additional consideration described in this
Agreement, this Agreement signed by you must be returned to Raychem by December
13, 1995.
Finally, you agree that you will not disclose to anyone (except for
your spouse, accountant, and/or lawyer) or allow anyone else to disclose the
existence of, reason for, or contents of this letter without Raychem's prior
written consent, unless required to do so by law.
Sincerely,
/s/ Richard A. Kashnow
Richard A. Kashnow
President
EMPLOYEE'S ACCEPTANCE OF AGREEMENT, RELEASE AND BENEFITS
I HAVE CAREFULLY READ, FULLY UNDERSTAND, AND VOLUNTARILY AGREE TO ALL THE TERMS
OF THIS AGREEMENT AND RELEASE IN EXCHANGE FOR THE ADDITIONAL BENEFITS TO WHICH I
WOULD NOT OTHERWISE BE ENTITLED. THIS RELEASE IS EXECUTED VOLUNTARILY AND WITH
FULL KNOWLEDGE OF ITS SIGNIFICANCE.
13 Dec 95 /s/ Harry O. Postlewait
- ------------------------------ -------------------------
Date Harry O. Postlewait
Approved as
to legal form
Atty: CMB
4
<PAGE> 5
EXHIBIT 1
RAYCHEM
PROPRIETARY INFORMATION AGREEMENT
In partial consideration of my employment by Raychem Corporation, I
agree as follows:
1. Confidentiality Obligation. I will hold all Raychem
Proprietary Information in confidence and will not disclose, use, copy, publish,
summarize, or remove from Raychem's premises any Proprietary Information, except
(i) as necessary to carry out my responsibilities as an employee, and (ii) after
termination, as specifically authorized in writing by an officer of Raychem.
"Proprietary Information" is all information related to Raychem's business,
unless: (i) the information is publicly known through lawful means; (ii) the
information was rightfully in my possession prior to employment at Raychem; or
(iii) the information is rightfully disclosed to me by a third party without
restriction.
2. Information of Others. I will also treat information of parties with
which Raychem does business as confidential to the same degree as if it were
Raychem information.
3. Raychem Property. All data, records, drawings, files,
documents, samples, products, and other materials, including copies, relating to
Raychem's business that I posses as a result of my employment, whether or not
confidential, are the sole and exclusive property of Raychem. In the event of
the termination of my employment, I will deliver to Raychem all Raychem data,
records, drawings, files, documents, sample, products, and materials, including
copies.
4. Inventions. All inventions, improvements, know-how, processes, and
techniques which result form work performed by me on behalf of Raychem or from
access to Raychem Proprietary Information or property ("Inventions") shall be
the property of Raychem. I will disclose promptly and in writing to the
individual designated by Raychem or to my immediate supervisor all Inventions
which I have made or reduced to practice. I agree to assign to Raychem, without
further consideration, my entire interest in all Inventions, and Raychem shall
be the sole owner of all patents and proprietary rights. I will assist Raychem
(at Raychem's expense) to obtain and enforce patents and other forms of trade
secret protection of Inventions.
5. Excluded Inventions. Attached is a list of all inventions which have
been made or reduced to practice by me prior to my employment which I desire to
exclude from this Agreement. If no list is attached to this Agreement, there are
1
<PAGE> 6
EXHIBIT 1
no inventions to be excluded at the time of my signing of this Agreement. This
Agreement also does not apply to any invention that qualifies under Section 2870
of the California Labor Code which reads:
"Any provision in an employment agreement which
provides that an employee shall assign or offer to assign any
of his or her rights in an invention to his or her employer
shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information
except for those inventions that either:
a) relate at the time of conception or reduction to
practice of the invention to the employer's business or actual
or demonstrably anticipated research or development of the
employer, or
b) result from any work performed by the employee for
the employer."
6. Patent Applications. In the event of the filing of any
original United States patent application covering any Invention of which I am a
named inventor, I will receive an inventor's fee of $100. In the event that an
application is filed with joint inventors, each inventor will receive $100.
7. Attorneys' Fees. In the event of litigation related to this
Agreement, the prevailing party will be entitled to recover reasonable
attorneys' fees and other costs. Either party may seek an injunction to restrain
any breach of this Agreement by the other.
HARRY O. POSTLEWAIT 07048
- ----------------------- -----------------
Employee's Name (Print) Employee's Number
/s/ Harry O. Postlewait Date: 16 June 88
- ----------------------- ------------
Employee's Signature
2
<PAGE> 7
EXHIBIT 2
PROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT is effective as of January 3, 1996, by and between
RAYCHEM CORPORATION, a corporation organized and existing under and by virtue of
the laws of the State of Delaware, having a place of business at 300
Constitution Drive, Menlo Park, California 94025 (hereinafter "RAYCHEM"), and
Harry O. Postlewait of Palo Alto, California (hereinafter "CONSULTANT").
NOW, THEREFORE, for and in consideration of the mutual covenants and
obligations assumed by the parties hereto, it is agreed as follows:
1. CONSULTANT, pursuant to the provisions of this Agreement, is retained
to perform services as reasonably requested from time to time by
RAYCHEM, at such place or places and at such times as shall be mutually
agreeable. The services shall be carried out at the direction of
Richard A. Kashnow or his designee.
2. As full and complete compensation for CONSULTANT's services and also
for the discharge of CONSULTANT's joint and several obligations
hereunder, RAYCHEM shall pay CONSULTANT the consideration named in the
Agreement and Release between the parties, to which this Agreement is
attached as Exhibit 2 ("Agreement and Release").
A. RAYCHEM shall reimburse CONSULTANT for the expense of round
trip tourist class transportation, hotels and meals, reasonably
incurred by CONSULTANT in connection with any trip made by
CONSULTANT at the request of RAYCHEM, that have been
preapproved by Richard A. Kashnow or designee.
B. RAYCHEM shall reimburse CONSULTANT for any other reasonable
expenses actually incurred which are incidental to the services
performed hereunder. Expenses exceeding One Hundred Dollars
($100.00) must be approved in advance by Richard A. Kashnow or
designee. Payment of CONSULTANT's invoice shall be made by
3. CONSULTANT's relationship to RAYCHEM shall be that of an independent
contractor and nothing in this Agreement shall be construed to create
an employer-employee relationship. Since CONSULTANT will not be an
employee of RAYCHEM, it is understood that CONSULTANT will not be
entitled to any benefits under RAYCHEM's retirement, group insurance or
medical plans or any other employee benefits except as expressly
provided in the Agreement and Release. In the performance of all
services hereunder CONSULTANT shall comply with all applicable laws and
regulations.
4. RAYCHEM agrees that during the term of this Agreement, or any extension
or renewal thereof, CONSULTANT may be employed by other persons, firms,
or corporations. However, CONSULTANT recognizes the vital importance to
RAYCHEM of the confidential status of any RAYCHEM proprietary
information and in particular all
<PAGE> 8
EXHIBIT 2
Professional Services Agreement
Harry O. Postlewait
RAYCHEM proprietary information pertaining to RAYCHEM. In any event,
and in no way limited by the foregoing, CONSULTANT agrees that while
obligated to perform services to RAYCHEM pursuant to this Agreement,
CONSULTANT shall not, without the prior written consent of RAYCHEM,
directly or indirectly, anywhere in the State of California, or in any
other State of the United States or in any other country in which
during such period business is conducted by RAYCHEM or substantial
customers of RAYCHEM are located, enter into or engage in any activity
which is in any way concerned with or competitive with the business
interests, products, and/or technology of RAYCHEM. CONSULTANT further
agrees that CONSULTANT shall not, either during the term of this
Agreement and any extension thereof, or during a term expiring two (2)
years after termination of this Agreement and any extension thereof,
serve as an expert witness for, or advisor to any third party in
connection with any litigation involving RAYCHEM without the express
prior written consent of RAYCHEM.
5. CONSULTANT understands that RAYCHEM does not desire to acquire from
CONSULTANT any secret or confidential know-how or information of
CONSULTANT or which CONSULTANT has acquired or shall hereafter acquire
from any third party. Accordingly, CONSULTANT represents and warrants
that CONSULTANT is free to divulge to RAYCHEM, without any obligation
to, or violation of any right of CONSULTANT or of others, any and all
information, practices or techniques which CONSULTANT will describe,
demonstrate, divulge, or in any other manner make known to RAYCHEM
during CONSULTANT's performance of services hereunder. CONSULTANT
hereby undertakes to exonerate, indemnify and hold harmless RAYCHEM
from and against any and all liability, loss, cost, expense, damage,
claims or demands for actual or alleged violation of the rights of
CONSULTANT or of the rights of others whose secret or confidential
know-how or information CONSULTANT has divulged to RAYCHEM in any trade
secret, know-how or other confidential information by reason of
RAYCHEM's receipt or use of the services or information described
above, or otherwise in connection therewith.
6. As used in this Agreement, the term "Invention" means any and all
discoveries, improvements, trade secrets, processes, techniques,
copyrightable material, computer programs, formula, design and
know-how, of any kind or nature, whether or not patentable, and whether
or not related to RAYCHEM's business, and which are invented,
conceived, discovered, developed or reduced to practice by CONSULTANT
and which in any way result from or arise out of CONSULTANT's services
hereunder and/or CONSULTANT's exposure to RAYCHEM's proprietary
information.
CONSULTANT agrees that CONSULTANT will promptly and fully disclose to
RAYCHEM all Inventions. CONSULTANT also agrees to and hereby does
assign to RAYCHEM all right, title and interest in and to all
Inventions and CONSULTANT represents and warrants that CONSULTANT has
no contractual or other obligations to any third party which preclude
or in any way encumber CONSULTANT's right to assign to RAYCHEM the full
and exclusive right, title and interest in and to any and all
Inventions. It is further understood and agreed that all Inventions
will be and remain the property of RAYCHEM whether or not disclosed,
assigned or patented.
2
<PAGE> 9
EXHIBIT 2
Professional Services Agreement
Harry O. Postlewait
CONSULTANT shall, if RAYCHEM shall so request, assist RAYCHEM in every
proper way (entirely at the expense of RAYCHEM) to obtain for the sole
benefit of RAYCHEM patents on Inventions in any and all countries.
RAYCHEM shall compensate CONSULTANT at a reasonable rate for time
actually spent by CONSULTANT at RAYCHEM's request on such assistance.
The decision to file (or not to file) and/or continue to prosecute a
patent application or applications on any Inventions shall be in
RAYCHEM's sole discretion.
7. The parties hereto acknowledge that during the course of CONSULTANT's
service to RAYCHEM pursuant to this Agreement it will be necessary or
desirable for RAYCHEM to disclose to CONSULTANT significant RAYCHEM
proprietary information. Any information imparted to RAYCHEM in
confidence by a third party shall be deemed for purposes of this
Agreement to constitute RAYCHEM proprietary information. CONSULTANT
fully understands that the maintenance of RAYCHEM's proprietary
information in strict confidence and the confinement of its use to
RAYCHEM is of vital importance to RAYCHEM. CONSULTANT therefore agrees
that all information and knowledge divulged to CONSULTANT by RAYCHEM or
which CONSULTANT acquires in connection with or as a result of
CONSULTANT's services hereunder shall be regarded and treated by
CONSULTANT as confidential. Without limiting the generality of the
foregoing, CONSULTANT recognizes that, unless and until published, all
features of the materials, apparatus, process and application methods
heretofore or hereafter used or developed by RAYCHEM shall be regarded
and treated by CONSULTANT as a trade secret of RAYCHEM. CONSULTANT
shall not use, nor shall CONSULTANT disclose, any such information or
knowledge to any person either during or after the term of this
Agreement, except only to those employees of RAYCHEM as may be
necessary in the regular course of CONSULTANT's duties hereunder, or
except as otherwise authorized in writing by RAYCHEM, unless such
information or knowledge are, or become, publicly known through no act
or omission of CONSULTANT.
8. CONSULTANT recognizes that all records and copies of records, drawings,
models, apparatus, samples and the like which in any way relate to
RAYCHEM's technology, operations, investigations and business, and
which are made or received by CONSULTANT during the term of, or
otherwise pursuant to, this Agreement are and shall remain the
exclusive property of RAYCHEM. CONSULTANT shall keep such records
and/or copies thereof at all times in CONSULTANT's custody and subject
to CONSULTANT's control, and shall surrender the same to RAYCHEM
immediately upon the request of RAYCHEM.
9. CONSULTANT hereby undertakes to exonerate RAYCHEM, its officers, agents
and employees from and against any and all liability, loss, cost,
damage, claims, demands for expenses of every kind on account of any
injuries (including death) to CONSULTANT or loss of or damage to
CONSULTANT's property arising out of or resulting in any manner from or
occurring in connection with CONSULTANT's performance of services
hereunder, except only if caused solely by the negligence of RAYCHEM or
its servants or employees.
3
<PAGE> 10
EXHIBIT 2
Professional Services Agreement
Harry O. Postlewait
10. CONSULTANT shall not assign this Agreement or any part thereof without
RAYCHEM's prior written consent, and any such purported assignment
shall be void. This Agreement shall be binding on CONSULTANT's heirs,
executors, legal representatives and permitted assigns and shall inure
to the benefit of RAYCHEM's subsidiaries, successors and assigns. If
any provision, paragraph, subparagraph, or clause, or any part thereof
of this Agreement shall be found invalid or unenforceable under any
applicable law or regulation, such provision, paragraph, subparagraph,
or clause, or part thereof, shall be deemed inoperative and shall not
affect the remainder of the Agreement and the Agreement shall be
construed as if such invalid portion had never been included.
11. This Agreement shall be effective as of the date first written above
and shall terminate on January 3, 1998. Either party shall have the
right to terminate this Agreement subject to three (3) months prior
written notice. This Agreement will be subject to renewal at RAYCHEM's
option. Any act or omission by CONSULTANT constituting a material
breach of this Agreement shall subject this Agreement to termination
immediately by RAYCHEM for good cause and shall automatically suspend
all RAYCHEM's obligations to perform hereunder so long as CONSULTANT is
in breach hereof. This Agreement shall terminate automatically in the
event of CONSULTANT's death or inability for any reason to perform the
services contemplated herein. On termination of this Agreement, for any
reason, RAYCHEM's obligation to pay any compensation, except for
services or expenses already properly accrued or incurred, shall
forthwith cease and terminate. Termination of this Agreement for any
reason shall not affect CONSULTANT's obligations under Paragraphs 4
through 9, inclusive, hereof. CONSULTANT represents and warrants that
CONSULTANT has or will promptly obtain an agreement containing
provisions equivalent in all material respects to the provisions
contained in Paragraphs 4 through 9, inclusive, hereof with all agents,
employees or associates of CONSULTANT who will be in any way involved
either with RAYCHEM proprietary information or otherwise in connection
with the services being performed hereunder. The obligations undertaken
by CONSULTANT pursuant to Paragraphs 4 through 9, inclusive, hereof
shall extend to the subsidiaries and affiliates of RAYCHEM and to its
predecessors and successors in interest. CONSULTANT shall have the
right to terminate this Agreement in the event that RAYCHEM does not
pay any invoice of CONSULTANT pursuant to terms of this Agreement.
12. Any notices or communications hereunder shall be effective only if in
writing, addressed as follows:
If to RAYCHEM: RAYCHEM CORPORATION
Attn: Richard A. Kashnow
300 Constitution Drive
Menlo Park, California 94024-1164
with a copy to: RAYCHEM CORPORATION
Attn: Legal Department
4
<PAGE> 11
EXHIBIT 2
Professional Services Agreement
Harry O. Postlewait
MS 120/8502
300 Constitution Drive
Menlo Park, California 94024-1164
If to CONSULTANT: Harry Postlewait
(Home address deleted)
13. This Agreement has been negotiated, executed and delivered in the State
of California. The parties hereto agree that all questions pertaining
to the validity and interpretation of this Agreement shall be
determined in accordance with the laws of the State of California.
14. This Agreement, together with the Agreement and Release, is the entire
contract of the parties and supersedes any prior agreements between the
parties. Any changes in or modifications of this Agreement shall be
effective only if in writing and signed by the parties hereto.
CONSULTANT represents that in entering into this Agreement, CONSULTANT
has not relied on any previous oral or implied representations,
inducements or understandings of any kind or nature whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the day and year written on the first page hereof.
RAYCHEM CORPORATION
by: /s/ Richard A. Kashnow
-------------------------------
Richard A. Kashnow
Title: President
-------------------------------
Date: Dec. 13, 1995
-------------------------------
CONSULTANT
by: /s/ Harry O. Postlewait
-------------------------------
Harry Postlewait
Social Security No.: (Social security no. deleted)
-------------------------------
Date: 13 Dec 95
-------------------------------
Department/Account to charge: 7815/53180001
Approved as
to legal form
Atty: CMB
5
<PAGE> 12
EXHIBIT 3
January 2, 1996
Harry O. and Sandra A. Postlewait
(Home address deleted)
Re: Amendment to Loan Agreement
Dear Harry and Sandra:
This letter will confirm our agreement to amend the Loan Agreement
dated June 28, 1993 between you and Raychem Corporation. The biweekly principal
repayment in Section 1(a) of the Loan Agreement will be changed from $1,000 to
$2,000 beginning January 12, 1996. As of the date of this letter, $194,414 of
the principal is outstanding. In addition, there is currently accrued but unpaid
interest of $2,333.09. On the first date that the principal loan balance is
reduced to $100,000, Raychem Corporation hereby agrees to forgive the remaining
balance. This event will be reported as wage income to federal and state taxing
authorities on Harry's W-2 for the calendar year in which it occurs.
This letter supersedes the requirement in Section 1(e) of the Loan
Agreement to repay the loan within 120 days after termination of Harry's
employment. Sections 3(b)(i) and 6(d) of the Loan Agreement are deleted.
Termination of employment shall also be eliminated from Sections 2(c) and 4(c)
of the Promissory Note to the extent that these sections accelerate your
obligation to repay the loan.
All of the terms of the Loan Agreement not expressly modified by this
letter remain in full force and effect. Please indicate your agreement and
acceptance of this Amendment to the Loan Agreement by signing below.
Very truly yours,
RAYCHEM CORPORATION
/s/ Bob Vizas
Robert J. Vizas
Vice President and General Counsel
Agreed:
BORROWER
/s/ Harry O. Postlewait
- -------------------------
Harry O. Postlewait
/s/ Sandra A. Postlewait
- -------------------------
Sandra A. Postlewait
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD
ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000082206
<NAME> RAYCHEM CORPORATION
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 168990
<SECURITIES> 0
<RECEIVABLES> 312089
<ALLOWANCES> 10644
<INVENTORY> 233583
<CURRENT-ASSETS> 812447
<PP&E> 1133599
<DEPRECIATION> 613281
<TOTAL-ASSETS> 1451862
<CURRENT-LIABILITIES> 291392
<BONDS> 242143
0
0
<COMMON> 44493
<OTHER-SE> 746122
<TOTAL-LIABILITY-AND-EQUITY> 1451862
<SALES> 820555
<TOTAL-REVENUES> 821566
<CGS> 390645
<TOTAL-COSTS> 391575
<OTHER-EXPENSES> 60555
<LOSS-PROVISION> 546
<INTEREST-EXPENSE> 6016
<INCOME-PRETAX> 80751
<INCOME-TAX> 23219
<INCOME-CONTINUING> 57532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57532
<EPS-PRIMARY> $1.27
<EPS-DILUTED> 0
</TABLE>
